Billionaire Bob Rich, the owner of the privately held Rich Products Corporation is being urged to launch a new Buffalo-based marketing unit focused on ‘brand-building’ across the multi-national firm’s product channels. Many in the local business community believe that Rich Products has underplayed its hand in the global marketplace, particularly related to its firm-wide brand marketing strategies.
Other firms, like Proctor & Gamble, invest heavily in building stand-alone brands in various industry verticals that are positioned to dominate a given consumer market segment. This strategy allows the firm to monetize some of its market capitalization without significantly diminishing the conglomerate as a whole — like when the firm sold Pringles to Kellogg’s in 2012 for $2.65 billion.
Some in Buffalo’s business community, including the publisher of The Chronicle, believe that the Rich family can monetize an additional $6 billion to $8 billion in exit stransactions over the next ten years — and can do so in a way that keeps the privately held firm intact and doesn’t diminish the firm’s core operations, all the while enhancing its capacity to spawn new brands and spin-out those production units.
With Rich Product’s extensive distribution networks, it is capable of architecting unique brands and positioning them in the national consciousness pervasively in a short number of years. Rich Products can then sell or spin-off of those subsidiaries in a way that doesn’t diminish the parent brand’s core competencies or primary cash flows.
For Proctor & Gamble, it’s a relatively common strategy. It sold Duracell batteries to Berkshire Hathaway; it sold Folgers coffee and Crisco to The J.M. Smucker’s Company; it sold Aleve to Bayer; it sold Iams pet food to the Mars Corporation; among dozens of other transactions, whether with Fortune 500 companies, multi-billion dollar private equity funds, or through leveraged spin-offs.
Rather than doing it the way of Proctor & Gamble, which exited each of those industries following those transactions, Rich Products doesn’t need to exit any of its industry verticals because of its far reach across food categories. It could sell a brand of cookies without getting out of the cookie business, for instance.
As a matter of strategy, Rich Products hasn’t aggressively marketed stand-alone brands in their various industry verticals. Take for instance its founding product — Rich’s Whipped Topping — a non-dairy advent of Bob Rich, Sr. in 1945 during the milk shortages of the War period. To this day, the product is still marketed plainly and offered only in two flavors: regular and fat-free. Is there no market for mango-flavored whipped topping? Or pistachio, or banana, or watermelon?
In contrast, just think of the ways that General Mill varietized wheat cereal into different configurations, flavors, and forms. They employed the Pillsbury Doughboy, Count Chocula, and Betty Crocker (among many others).
Observers postulate that a Buffalo-based marketing unit could tactically architect a slew of new brands around the firm’s existing product lines — from its cakes, icings, donuts, toppings, creamers, frozen snacks, and frozen pizzas — with the aspirational intention of monetizing an extra $10 billion for Buffalo-based company over the next ten years. It could also mean dozens of new jobs for area artists, creatives, and brand marketing experts.
Over the years the firm has acquired subsidiaries with highly evolved brand identities and largely stand-alone operating structures: F’real, a milkshake and smoothing vending business; Carvel, an ice cream cake producer; Casa Di Bertacchi, a frozen meatball manufacturer; Sea Pak, a Georgia-based seafood company; and Byron’s Smokehouse, a BBQ-themed frozen dinner producer.
The firm’s core brands (built internally over time rather than through acquisitions) are less well-fashioned: CoffeeRich, the non-dairy creamer; Rich Whip, it’s non-dairy whipped topping; Farm Rich, a line of frozen snack foods; and Our Speciality, a bakery and dessert producer.
CoffeeRich and Rich Whip, which sound like they could be positioned strongly in their segments, but each is only available in two basic flavors. But Rich’s competitors have decided to give customers a pallet of product varieties. CoffeeMate, a product of Nestle, is a non-dairy creamer that’s currently offered in 24 flavor varieties. Reddi Wip, a product of ConAgra, is available in eight flavor varieties. Rich’s reluctance to similarly varietize it’s two most core product lines has raised eyebrows in Buffalo business circles.
The firm’s line of baked sweets and desserts, Our Speciality, is not a protruding brand in the way that some logos pop in the isle, as it lacks the loud packaging of Hostess’ Twinkies. Instead, the line of products (which are far superior to Twinkies), offers a great diversity of snack options, without any of those particular options given too much of a spotlight or independent brand identity. The strategy seems to revel in understatement.
It is in this business unit that Rich Products has the most opportunity to monetize existing product lines through brand invention, positioning, and sale.